Mortgage Calculator

Your monthly mortgage payment is calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal (home price minus down payment), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (loan term in years times 12). This formula ensures equal payments each month while the proportion allocated to principal versus interest shifts over time -- early payments are mostly interest, while later payments are mostly principal.

The traditional recommendation is 20% down, which lets you avoid Private Mortgage Insurance (PMI) and results in lower monthly payments. However, many loan programs accept as little as 3-5% down for conventional loans and 0% for VA or USDA loans. A larger down payment reduces your loan amount, lowers your monthly payment, and saves significant interest over the life of the loan. Use this calculator to compare different down payment amounts and see the impact on your total cost.

A 15-year mortgage has higher monthly payments but dramatically lower total interest -- often saving you tens of thousands of dollars. A 30-year mortgage offers lower monthly payments, giving you more cash flow flexibility. For example, on a $280,000 loan at 6.75%, a 30-year mortgage costs about $1,816/month with $373,670 in total interest, while a 15-year mortgage costs about $2,476/month with only $165,624 in total interest -- saving over $208,000. Use the Compare tab in this calculator to see exact numbers for your situation.

Extra payments go directly toward your loan principal, reducing the balance that accrues interest. Even a small extra payment each month can dramatically shorten your loan term and save tens of thousands in interest. For example, paying an extra $200/month on a $280,000 loan at 6.75% over 30 years could save you over $75,000 in interest and pay off the loan roughly 6 years early. Use the Extra Pay tab to calculate your exact savings.

Your total monthly housing cost typically includes more than just principal and interest. Budget for property taxes (usually 0.5-2.5% of home value annually), homeowners insurance ($800-$2,000/year on average), Private Mortgage Insurance or PMI if your down payment is below 20% (0.5-1% of loan annually), HOA fees if applicable, and maintenance (budget 1-2% of home value per year). A good rule of thumb is that your total housing cost should be no more than 28-30% of your gross monthly income.